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How To Protect Your Invention

One of the best ways to make money as an inventor is to license your invention to other small businesses or business entities. But, by shopping your invention around, you may put your intellectual property rights to that invention in jeopardy. The more you reveal about your invention, the more likely another person can steal or copy it.

Some of the best ways to gain legal protection for your invention are below. This article will go through each in detail.

  • If your invention is patentable, you must file for a provisional patent immediately.
  • If your invention is not patentable, make sure you have potential customers sign a Non-Disclosure Agreement (NDA).
  • If your invention is not patentable and customers won't sign an NDA, then be careful what you disclose. Establish a confidential relationship with the customer.

Use this article to help you protect your invention while you search for partners or wholesalers.

Know Your Intellectual Property Basics

As a small business owner, inventor, startup, or entrepreneur, you must know all intellectual property (IP) protection available. IP protection grants inventors and creators exclusive rights to their inventions. There are four key types of intellectual property. If you have a new product or new business ideas, please keep the four types of intellectual property protection in mind:

  1. Trademarks protect branding elements such as brand names, business names, logos, and slogans.
  2. Copyright protection is for artistic works such as literature, art, music, and software codes.
  3. Patents protect inventions, new and useful processes, machines, manufacturers, compositions of matter, and new and useful improvements of previous inventions.
  4. Under trade secret law, trade secrets protect formulas, customer lists, processes, and confidential information that provides a competitive advantage.

Patent Your Invention if Possible

Patent protection is significant in protecting your hard work. Only new, novel, and nonobvious inventions or processes are eligible for patent protection. There are three types of patents you can file an application under—utility patentsdesign patents, and plant patents.

You or a patent attorney can file a patent application with the U.S. Patent and Trademark Office. Visit the United States Patent and Trademark Office (USPTO) for instructions on how to get patent protection for your invention.

Immediately file for a provisional patent application if you think your invention is patentable. The status of "patent pending" will often be enough to deter potential thieves and copycats. It's important to establish your right to the patent as soon as possible. A provisional patent allows you to stake your claim while you work on your patent within a small time frame.

Use Non-Disclosure Agreements When Possible

Unfortunately, many inventions and ideas are not patentable. That does not mean you cannot protect your ideas or inventions through other ways. One of the best courses of action is to use NDAs when dealing with potential customers, investors, partners, or vendors. NDAs also go by other names, such as disclosure or confidentiality agreements.

Upon signing an NDA, if a person breaks any provision of the NDA, you can sue them to recover any damages caused by their breach of the agreement. Damages may include lost profits or attorney fees. You may also get an injunction to stop the person from further disclosing anything else in the NDA.

The critical portions of an NDA set forth:

1. Confidential Information

NDAs define what is confidential. They may include a section on what is a trade secret. Include strict internal security measures to protect trade secrets, such as:

  • Limited access
  • Password protection
  • Confidentiality agreements with employees

NDAs also expressly exclude certain items from the definition of confidential so that parties aren't burdened with unnecessary obligations.

2. Each Party's Obligations

It isn't enough to simply say something is confidential. NDAs specify the standard of care in keeping the item secret. It lists the obligations each party must fulfill to maintain the confidentiality of the underlying information. Common examples of these duties include how information is handled with third parties who aren't part of the agreement. It can also set forth how information should be handled and stored.

3. Length of Obligations

The party that wants the information protected will want a longer period of protection. The other party will want a shorter period of protection. This is often one of the most significant points of contention between parties and is usually resolved in negotiations. Common periods within the U.S. are anywhere from two to five years.

As an inventor, your flexibility is determined by how long you think it will take others to figure out your invention once people have access to it. If you think others will begin duplicating your invention quickly, a longer protection period may not be necessary.

4. Agreement Breach Consequences

Pay close attention to what the agreement says if one party breaches the agreement. Typically, the prevailing party in an argument will pay reasonable attorney's fees and court costs. There are some parties who may add receiving attorney's fees anytime they have to see an attorney during a potential breach. That is not something you will likely want to agree to. Consult an attorney before making that decision.

The agreement should lay out where a lawsuit has to take place. It should also lay out what state laws will govern the agreement. This is either a venue or jurisdiction. It may also state whether arbitration will occur instead of court. Arbitration can keep the breach and argument out of the court system, which can be ideal for larger companies. Large companies will often try to put in favorable terms for their benefit. Always consider the worst-case scenario and decide if it's affordable for you to attend court across the country years later.

Protective Measures When You're Unable to Use an NDA

You may not be able to convince a potential customer, vendor, or partner to sign an NDA. If you can't, don't just abandon caution and share your invention without restraint. Even without an NDA, there are still several steps you can take to protect yourself and your invention:

1. Investigate the Other Party's Reputation

Dig into the other person or business' reputation to decide whether disclosure without an NDA makes sense. If they have a solid reputation, applying some of the following steps and a little common sense might make a lot of business sense. If the other party has a poor reputation and a history of litigation, then it may not be worth the risk.

2. Create a Confidential Business Relationship

Even if a business is reluctant to sign an NDA, some businesses might be comfortable establishing a less formal confidential relationship. Even if a company is unwilling to create a written and signed confidential relationship, you can still preserve your right to claim a confidential relationship in the future if:

  • The customer you're giving confidential information to solicits, or asks, it from you. In other words, you want to have them contact you about the invention, not the other way around.
  • You told the customer that the use of your invention was a business proposition and that you desired payment.
  • When you disclosed the information, you requested that the information stay secret.
  • The information is a trade secret and classified as such (i.e., it has commercial value and is not known by competitors).

3. Disclose Only the Basic Idea

A potential customer, vendor, or partner should focus on something other than the details of your invention. Most people should be primarily concerned with what your invention does and how it can make money. Don't disclose the details of the invention or the critical components that make it unique. Be skeptical of anyone wanting you to disclose everything unless they have a solid business reason for doing so. This helps you keep your intellectual property rights.

Get Legal Advice From an Intellectual Property Attorney

Intellectual property law is complex. If you need help licensing or protecting your invention or want to secure your legal rights, consider meeting with a patent attorney or business law attorney.

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